The Problem with the Separation of Ownership from Control Is

question 176

Multiple Choice

The problem with the separation of ownership from control is that

• A) the owner in a proprietorship may not always act in the profit-maximizing fashion because he or she may not have the experience or expertise that professional managers have.
• B) the managing partner of a firm may not always behave in the way that other managers would if they were the managing partners.
• C) the managers of the firm can make decisions that reduce the wealth of the owners while not reducing their own wealth.
• D) the owners of firms may not always know the best way to run a firm, yet they are the ones who elect the managers of the firm.

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Definitions:

Above-ground

Pertains to structures, systems, or cables located on or above the surface of the earth, as opposed to being buried underground.

Below-ground

Positioned or located beneath the surface of the ground.

Dissipation

Loss of energy, especially the conversion of electrical energy into heat in a circuit due to resistance.

Voltage Divider

A circuit that generally is constructed by connecting resistors in series to produce desired voltage drops across the resistors.